Moody’s Cuts Rating for Qantas Airways (Folo) As Growth Keeps Rolling

Qantas Airways, the largest Australian airline, had its ratings outlook cut to "negative" from "developing" because it may return funds to shareholders, Moody’s Investors Service said Monday. A buyback of shares or higher dividend payments will "pressure the rating," Moody’s said in a statement.

The airline may spin off units or hand cash to investors after the failure of a 11.1 billion Australian dollar, or $9 billion, buyout led by Macquarie Bank, Qantas said last week.

A return of funds to investors may result in Qantas having a "more aggressive financial profile," said Terry Fanous, a senior vice president at Moody’s. The airline’s rating would be lowered if the ratio of its debt to earnings before interest, tax, depreciation and amortization rises above 3.5 times, according to the statement.

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